Latvian banking system jeopardised by money laundering and bribery allegations

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Series Details From February to June 2018
Publication Date 28/06/2018
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Reports and analysis of two cases affecting the reputation of Latvia's banking system: the collapse of the ABLV Bank and the allegations of bribery hitting the Head of the country's Central Bank, Ilmars Rimsevics.

Further information:

Latvia's ABLV Bank - the country's third largest financial institution - was subject to a Statement from the US Treasury Department on 13 February 2018, announcing a number of measures against the bank due to it being of 'primary money laundering concern'. This was connected to a case involving the North Korean weapons programme.

Following the deterioration of its financial position, the European Central Bank (ECB) instructed Latvia's financial watchdog to freeze all payments by the lender. However, the ECB was forced on 24 February to declare the bank 'failing or likely to fail', meaning ABLV would either have to be saved under the EU’s resolution rules or allowed to collapse. The EU's Single Resolution Board later declared that the rescue of the Latvian bank would not be in the public interest.

In parallel, a bribery case was made against the Governor of Latvia's Central Bank (Latvijas Banka), Ilmārs Rimšēvičs. On 17 February, the country's anti-corruption authority detained him on suspicion of demanding bribes of at least €100,000. Mr Rimsevics was released on bail two days later and argued that such allegations were a set-up to punish him for cracking down on lax practices. Latvia's Prime Minister called for him to stand down and the whole case caused international concern, given his position as a member of the ECB governing council. In June 2018, prosecutors charged the central bank governor with bribery.

While the Latvian government was not in a position to sack him but prevented Mr Rimsevics from attending any further meetings of the ECB governing council. A case was filed with the Court of Justice of the European Union (CJEU) against this decision on 21 March. The ECB decided to file a case on 6 April requesting views on Latvia's handling of the situation.

Related Links
EUObserver, 09.04.18: EU judges to rule on ECB empty chair
Deutsche Welle, 09.04.18: Top EU court to rule on Latvia bank chief's ban
Reuters, 21.03.18: Latvian cenbank governor sues government over curbs on ECB work
The Guardian, 19.02.18: Latvian representative at ECB detained in bribery case
The Economist, 22.02.18: Latvia’s top banking official is accused of demanding bribes, 18.02.18: Latvian central bank boss questioned overnight, given 'detained status'
Reuters, 21.03.18: Latvia to ban shell companies in money laundering clampdown
Politico, 26.02.18: Latvia-sized hole in European banking supervision
EurActiv, 19.02.18: Latvia’s chief banker arrested by anti-corruption officials
EurActiv, 21.02.18: Latvian defence ministry says corruption claims may be disinformation campaign
Latvijas Banka: Press Release, 18.02.18: Latvijas Banka continues its business as usual
ECB: Press Release, 06.04.18: ECB asks European Court of Justice to clarify Latvian case
EU: SRB: Press Release, 24.02.18: The Single Resolution Board does not take resolution action in relation to ABLV Bank, AS and its subsidiary ABLV Bank Luxembourg S.A.
Politico, 20.08.18: Latvia’s money-laundering mud fight

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